Thu, Aug 10, 2006 - Page 9 News List

ASEAN comes of age, looks for new challenges

While the Southeast Asian grouping has been a solid success on its own somewhat limited terms, it's about to face some tough choices

Southeast Asia's club of nations, ASEAN, turned 39 on Tuesday and already it appears to be grappling with a mid-life crisis.

ASEAN, born out of the Cold War of the 1960s, began as a group of newly independent states dedicated to fighting communism and aching for stability.

Four decades later, on "ASEAN Day," the group has developed a middle-age obsession: economics. It's in a race to remain competitive against the emerging might of China and India.

And, so far, despite plenty of frustration with ASEAN's pace of reform, the club appears to be making some progress.

"Twenty years ago or more, there was a long-standing consensus that you shouldn't take ASEAN declarations at their word," said Natasha Hamilton-Hart, associate professor of Southeast Asian studies at the National University of Singapore.

"They were typically vague sort of statements of intent ... Often they were not intended to be followed by any hard, binding commitments. But I think that's changed," she said.

ASEAN is still a long way from becoming a kind of EU, which is only a decade older: there is no single market, it has a kaleidoscope of different currencies and political systems, and it still doesn't even exist as a legal entity.

But in the search for economies of scale, to avoid being robbed of foreign investment by China and India, ASEAN has made integration its mantra. It sounds like an EU in the making.

Its big dream is a "single community," where goods, services and labor flow freely across borders, and it is drafting a charter that could enshrine its recently declared adherence to democracy, human rights and the rule of law.

ASEAN also has a free-trade area, although it is riddled with temporary exclusions, and plans to put in place visa-free travel, to be followed by an open-skies airline policy.

"There are many steps that we need to take, in order to see the birth of an ASEAN community," Malaysian Foreign Minister Syed Hamid Albar told an ASEAN flag-raising ceremony on Tuesday.

That is an understatement -- especially given that ASEAN wants to become a single market by 2020, or within the next 10 years if a proposal to bring the date forward to 2015 is adopted.

Even ASEAN's supporters believe it would do well to achieve even some of what it has set out to do.

"We're not going to get the common market even of the type Europe had in the 1980s by 2015," said Manu Bhaskaran, a partner at economics consultancy Centennial Group in Singapore.

ASEAN's progress may be slow, and modest by EU standards, but it so far appears to be meeting the competitive threats from China and India, Bhaskaran added.

"ASEAN is beginning very slowly -- too slowly -- but they are beginning to make some of the painful decisions to really put progress on the road," he said.

Foreign direct investment dipped in China between 2004 and 2005, according to UN figures, while investment in two major ASEAN economies -- Thailand and Indonesia -- actually rose.

Last year, ASEAN states Indonesia, Malaysia, Singapore and Vietnam were all tipped to perform well in terms of foreign direct investment in the medium term, according to a survey published by the UN Conference on Trade and Development.

Taken together, ASEAN encompasses more than 500 million people and has combined gross domestic product of more than US$800 billion, bigger than India, according to World Bank 2005 data.

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